Texas judge denies AG's request for injunction in text message case

AUSTIN, Texas (Legal Newsline) -- A Texas district judge last week denied, in part, a request for a temporary injunction by Texas Attorney General Greg Abbott against a company for allegedly using premium text message services to defraud wireless customers in the state.

Last month, the Attorney General's Office and Verizon Wireless filed separate lawsuits against Jason Hope and Wayne P. DeStefano and companies they own, including Jawa and its holding company, Eye Level.

The company, based in Scottsdale, Ariz., claims to be one of the nation's top providers of original content through text messages.

Verizon said the defendants allegedly defrauded it by misappropriating approved short codes for unapproved "shadow campaigns" that did not comply with Verizon Wireless' consumer protection and disclosure policies.

According to Verizon's lawsuit, the defendants also were blocking certain IP addresses from accessing the websites associated with these shadow campaigns or were re-directing visitors to shell websites, preventing Verizon Wireless and its auditors from finding the shadow campaign websites.

Judge John K. Dietz, who issued the order Friday afternoon against Jawa, did not bar the company from doing business in Texas. However, his order provided a lengthy list of what the company must do to continue operating in the state.

For instance, Jawa must comply with certain non-legal guidelines developed by the Mobile Marketing Association, or MMA.

Hope, CEO of Jawa, says that is something the company already does and that he sees danger in the attorney general's attempt to regulate Internet communications by mandating industry guidelines.

"I have always been led to believe that Texas is one of the most pro-business states, but the attorney general's actions in this case certainly seem contrary to that notion," he said in a statement.

The company says if there are rules to be followed, they need to be national in scope, and that the Federal Communications Commission is the agency with authority in this area.

Following one set of rules in Texas and another set elsewhere would be an "expensive burden," Jawa said in a company news release.

"Compliance would inevitably slow down the Internet, and ultimately be a cost to consumers, which is not in the public interest," it said.

Jawa said it immediately appealed the portion of the order mandating compliance with MMA guidelines.

"Our problem with the judge's order and what we will raise in our appeal is that they shouldn't be modified and mandated state by state and judge by judge," Hope said.

Meanwhile, Verizon's request for a temporary injunction against Jawa is scheduled for Wednesday at the U.S. District Court in Phoenix.

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.